The five retail trends that didn’t come to pass in 2018 – and predictions for 2019

In Industry Comment, Industry News On

Brightpearl chief executive Derek O’Carroll provides his predictions for the retail sector in the coming year

2018 has been a turbulent year in the retail sector – some of the key trends and developments that many thought would come to pass have yet to gain widespread traction, while others have definitely come to the forefront.

Retailers are under increasing pressure to deliver. Customers have more options than ever to choose from and their expectations are continuing to soar. This means that 2019 will bring even more hurdles – as well as opportunities – for brands and businesses.

Here, we reflect on the retail trends which didn’t come to pass this year – but which might within the next twelve months…

  1. Death of the high street greatly exaggerated, again

Bemoaning the demise of the British high street has become a popular pastime. While the high street continues to be in flux, the reports of its death have been, to borrow from Mark Twain, greatly exaggerated. A number of larger names did find themselves struggling with store closures this year, however, independent retail saw in a boon in business, with significantly more shops opening in the first half of 2018 than in the same period last year.

I’m not surprised by this. As shoppers, we’re increasingly looking for individual, stylized brands that resonate with us. For physical retailers, a key differentiator could be the in-store customer experience – proving new reasons for customers to visit. For example, click & collect continues to rise rapidly in the UK, outpacing growth in the online retail channel. Next year, savvy merchants will be considering introducing competitive Click & Collect propositions to drive further footfall into stores.

2. Voice search gets tongue-tied 

2018 saw incremental increases in voice searching, and I believe we’re on the verge of full-scale search revolution – which will happen over the next few years. There are a few strong motivating factors here, including the increased sophistication of voice-recognition systems – Microsoft’s voice recognition software now has an error rate of 5.1 percent, equalling the same rate of its human counterparts. 95% word recognition is actually the same threshold of accuracy as human speech (Google officially reached this threshold last year, to great excitement). This sheer accuracy of recognition is what will help voice search grow mainstream.

So will ensuring that voice interface technology matches up to conversations that we have every day with human beings. We expect machines to respond in a human way, seamlessly and intuitively, carrying on the exchange. When they don’t, bringing us up short by replying with, “I’m sorry, I don’t understand the question,” we’re thrown off and turned off.

Retailers must – and will – find a way to capitalize on voice-driven technology and ensure that it can replicate human conversations as this trend starts to take off next year.

3. Delivering on next-day expectations 

In May 2018, the use of next-day delivery services reached record highs, being used for 37% of all UK delivered orders. What’s more, it’s expected that 65% of retailers will offer same-day delivery by the end of next year.

In 1995, customer expectation on acceptable delivery time was nine days (yes, nine!); in 2018, it’s a mere 24 hours. And customer expectations are about to change again – same-day delivery will be the new normal within 18 months. However, 59% of shoppers in the last year have experienced goods not arriving on time. If your business isn’t able to deliver on current delivery expectations, how are you supposed to cope when the timeline shortens again? You won’t.

Many retailers do not have the right systems in place to meet this expectation of instant gratification. This could be a major differentiator for retailers next year and many will have to adapt or fall further behind their competitors.

Those retailers who do step-up and give serious thought to retooling how they invest and operate their supply chain are most likely to remain competitive, as we head into 2019.

4. A returning problem

Customer buying behaviours are changing all the time. Shoppers are returning 66% more items than five years ago, and 30% of all products ordered online are returned. This lost revenue costs UK retailers £60bn a year, £20bn of which is generated by items bought over the internet.

In 2018, retailers were expected to wake up and recognise the need to invest in their returns framework, to reduce costs and create stand-out against their competitors. However, this hasn’t happened. Nearly a quarter of brands admit that returns are the single biggest challenge in managing e-commerce. In addition, 69% of retailers still use no technology to manage their returns process. This clearly highlights how retailers themselves are exacerbating the cost and complexity of managing returns.

Poor returns experiences are a major pain point for shoppers and are often driving them to competitor firms. 30% of customers say they’ll abandon an online purchase if no free returns are offered, while a slow returns process is also a major frustration for online shoppers. Consumers say a timeframe of ‘three to five days’ is acceptable for processing returns, but with the average return taking six days to process, retailers need to work hard to reduce this timeline.

In 2019, I do expect more retailers to embrace technology to both enhance their returns framework and carve out competitive advantage – and the need for efficiency and automation will be crucial to that end.

5. It’s not personal, yet (cross-channel personalisation)

Creating a seamless path from inspiration to purchase is still a challenge for many retailers using disparate systems. Many are struggling with the ability to serve customers equally across all channels, whether in-store or online. With 73% of shoppers using multiple channels during their shopping journey, disjointed customer experiences could be ruining shopper satisfaction.

In 2018, we saw some brands becoming much better at offering a complete, omnichannel shopping experience. Some brands, like Net-a-Porter, are merging their digital and physical operations, to create a seamless and consistent customer journey.

Savvy brands understand that the contemporary consumer demands a strong omnichannel approach where service, experience and products interact. Seamless cross-channel service for customers is vital and having the right systems in place – both on the frontline and operational side – is key to presenting the experience that customers now expect.

While retail didn’t quite crack this in 2018, more brands will begin to make great strides over the next year – the upside is too great to ignore. 43% of purchases are now influenced by personalised recommendations, so getting this right across all channels could have a dramatic impact on purchasing conversion.

However, the ability to provide omnichannel personal service requires access to all data in one place. Having the right technology – so that all areas of your business have access to a single record for every shopper – will allow businesses to gain deeper insights about their customers. This can be used to better serve, engage with and reward customers on a more personal level.

In conclusion, the one sure bet for 2019 is that the customer will remain king. Therefore, retailers must put shoppers at the heart of everything they do. This includes delivering fast and frictionless experiences at every point of the buying journey.

Investing in technologies that will make day-to-day business operations smoother, and free-up time from back-office activities to focus on customer-driving initiatives will be crucial.

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